At the group's annual meeting in Sydney, following one in London last week, outgoing chairman Paul Skinner said BHP Billiton's 3.4-for-one share offer never recognized Rio Tinto's value and the group admitted it had paid too much for Alcan.

"We now live in a world in a different state," he told angry shareholders. "The Chinalco proposition is the best value proposition available to Rio Tinto today."

Rio's shares slid 4 percent on Monday, but that followed a 54 percent gain over the past three months, nearly 8 times better than the broader market (.AXJO) as investors were encouraged that the Chinalco deal would help Rio cut half its $38 billion in debt.

"It's been a tremendous performer in the past few months. People are just taking some profit ahead of the AGM today, since there's likely to be a lot of negative news articles about the Chinalco deal," said fund manager Tim Schroeders of Pengana Capital.

Prolonged price talks over iron ore, Rio's most profitable product, also weighed on its share price.

"There was some press this morning that the iron ore negotiations may get stretched out longer than anticipated and therefore that would be providing a level of uncertainty, which is probably not going to work favorably for the producer in the short term," said Jamie Spiteri, senior dealer at Shaw Stockbroking.

Rio and BHP are locked in talks with Asian steelmakers to settle iron ore prices for April 2009-March 2010. Steel mills want a quick settlement with a steep cut in annual prices, but the miners are holding out amid signs of an economic recovery.

Rio Tinto shares last traded down 4.4 percent at A$56.50, while BHP's shares were down 2.4 percent at A$32.62, helping to drag the broader market down 1.1 percent.

RIO STANDS BY CHINALCO

Major investors have complained that the Chinalco deal favors one shareholder over others, but they are starting to recognize it is the best option for slashing debt.

The deal would give China's top aluminum maker $12.3 billion worth of stakes in Rio's iron ore, copper and aluminum assets and $7.2 billion worth of convertible debt that could double its stake in the group to 18 percent.

"People are becoming educated about the prices (Chinalco is paying) and the repositioning of the company with less debt and growth options," said Schroeders.

There was also media speculation that BHP (BLT.L) had held informal talks with Rio (RIO.L) over the weekend, but fund managers said this was not behind the fall in Rio's share price.

BHP refused to comment on Monday on the speculation cited by broadcaster CNBC that it and Rio had held informal talks.

"They are always talking, but I wouldn't call the talks 'formal'," an investment banker with direct knowledge of the Chinalco-Rio deal told Reuters.

The speculation has been swirling for several weeks, sparked by questions on whether the Chinalco deal would go ahead in the face of political concerns about Australian resource assets falling into the hands of the Chinese state.

Pengana's Schroeders put a low probability on BHP doing anything with Rio in the next 12-18 months, saying conditions had not changed enough since it pulled its bid last November blaming weak commodity markets, Rio's debt and its inability to sell off assets.

Any talks now would have to focus on specific assets, or possibly a rights offer, as under UK takeover regulations BHP cannot revive a full takeover bid until November.

But Rio is focused on the Chinalco deal.

"I think potentially we are on the threshold of an exciting new partnership," Skinner said.

NEW YORK (Reuters) –General Motors Corp is prepared to part with a controlling stake in Opel/Vauxhall for nothing but a pledge to invest directly in a new company formed from its European operations, the Financial Times said on Sunday, citing two people familiar with its plans.

An investor will be asked to pay at least 500 million euro, or $652 million in equity, but the automaker will realize no financial gain as the money will be injected directly into Opel, the report said, citing a person familiar with GM's thinking.

GM is also prepared to unload Saab, its Swedish premium brand that filed for creditor protection in February, for as little as nothing in order to divest the brand, the report said.

GM, which has lost more than $82 billion since 2005, has received $13.4 billion in federal loans and is seeking more than $16 billion in additional government aid.

The White-House appointed task force has given GM 60 days to come up with a restructuring plan that cuts costs and debt levels more deeply than the automaker had planned.

By that point, officials have promised a decision on whether to support GM's turnaround as a much smaller auto company or whether to put it through a bankruptcy process intended to shed debt and laggard assets.

Last week, GM Chief Executive Fritz Henderson said the automaker was in talks with more than six financial and industrial groups about acquiring a stake in its European arm.

The FT said Commerzbank, GM's advisers on Opel, last week sent out an offer document for the German brand.

Italy's Fiat and SAIC, GM's main joint venture partner in China, have both denied interest in buying Opel/Vauxhall.

The FT also said GM's European unit is engaged in "aggressive" contingency planning to protect itself in case the company files for bankruptcy in the United States, citing a person familiar with GM's plans.

Options under consideration at GM are said to include putting financing in place for its international holdings ahead of a bankruptcy filing, and seeking debtor in possession financing from the U.S. government for the international operations after a Chapter 11 filing, the report said.

A new share issue -- the first by the world's No.2 maker of NAND-type flash memory in 28 years -- would dilute share value by about 28 percent at Friday's closing price of 332 yen.

Toshiba said in a statement that the company is always looking for appropriate measures to strengthen its finances, but there is nothing to announce at this point.

Toshiba shares were at 312 yen in morning trade.

The stock opened down 6.9 percent after the Nikkei business daily and Kyodo news agency reported the fund-raising plan.

Toshiba also on Friday widened its net loss estimate by 25 percent to 350 billion yen after writing down 85 billion yen in deferred tax assets, causing its shareholder's equity ratio to more than halve from a year ago to 8.2 percent.